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U.S. Citizenship and Immigration Services (USCIS) announced an increase to its immigration and naturalization application fees by an average of 86 percent, effective July 2007, contributing to a surge in application volume that challenged the agency's pre-adjudicative operations. In July 2007, the incoming application volume increased an unprecedented 100 percent over the prior month and the processing of 1.47 million applications was delayed. GAO was asked to review USCIS's current fee design and compare it to the principles in GAO's user-fee design guide and USCIS's management of operations affected by the new fees, specifically in projecting application volumes and contracting for application processing services. To do so, GAO reviewed legislation and agency documentation; compared the fee design to GAO's principles of effective user-fee design (equity, efficiency, revenue adequacy, and administrative burden); visited processing centers; and interviewed agency officials at these locations and in headquarters.

USCIS's 2007 fee design reflects choices and trade-offs consistent with several of GAO's four user-fee design dimensions--efficiency, equity, revenue adequacy, and administrative burden. For example, in three areas the fee design reflects policy choices related to equity and administrative burden considerations: (1) the structure of fee exemptions and waivers, (2) limitations on certain fee increases for a population deemed unlikely to be able to pay, and (3) decisions about how costs were assigned among users. However, USCIS did not conduct the analyses necessary to fully inform congressional decision-making or internal deliberations on some key areas, such as the cost of activities funded by fees whose rates are set in statute. Notably, the $1,000 fee for USCIS's premium-processing service for employment-based applications, which was the fifth largest single generator of funds for USCIS in fiscal year 2007, will be used for business process and technology improvements. As such, the additional costs of premium processing services are funded by nonpremium processing fee-paying applicants, raising equity concerns. Since USCIS has not identified the total costs of these services, the actual dollar amount being subsidized is unknown. The new fee design also does not allow for an appropriate "reserve" or carryover balance, to ensure the continuity of operations and cover fixed costs in the event of a decrease in applications, nor does it consider the costs associated with certain fee collection operations. According to USCIS's schedule, if the next review identifies a needed fee adjustment, it would occur in September 2009. However, USCIS did not provide documentation that would allow us to determine whether the 2009 fee review would address identified shortcomings in the 2007 fee review or whether the remaining time frames for key milestones, such as refining data and the proposed rulemaking schedule, are reasonable. Absent timely reviews, it is more likely that fees and costs will become misaligned, leading to costly challenges. Projections of USCIS application volume have historically been developed and used as budget tools but do not effectively inform workload management efforts. Specifically, the projections do not identify monthly variations in application volume, despite variations that regularly exceed 20 percent and the serious operational challenges associated with application surges. USCIS's contractors do not receive workload projection information, despite requirements that processing centers shall maintain the capacity to accommodate "spikes" in receipt volumes that are anticipated at least 45 to 90 calendar days in advance. Further, USCIS projection documents do not consistently record critical information such as factors that drive application volume, inhibiting analysis that could improve projections over time. Service-center contractors process USCIS mail and are paid according to a fixed unit price per piece. Contractors count up to 90 percent of incoming mail, but USCIS has not developed an agencywide standard operating procedure for validating the contractors' counts. As a result, USCIS is limited in its ability to verify that USCIS is receiving the service that it is paying for.

Recommendations for Executive Action

Status: Closed - Implemented

Comments: In August 2010, the United States Citizenship and Immigration Service (USCIS) issued its fiscal year 2010-2011 Immigration and Examinations Fee Account Fee Review Supporting Documentation with Addendum. USCIS included in this review documentation of it its application volume decisions, the application volume drivers and projected level of application volume adjustment, where appropriate.

Recommendation: The Secretary of the Department of Homeland Security should direct the Acting Director of the United States Citizenship and Immigration Services to document projection decision making more effectively, by more comprehensively accounting for (1) known application volume drivers, (2) the magnitude by which baseline projections have been adjusted in order to account for application volume drivers, and (3) reasons why OIS's projections--based on statistical analysis of historical application volumes--were not adjusted to account for any anticipated drivers.

Agency Affected: Department of Homeland Security

Status: Closed - Implemented

Comments: In February 2010, USCIS completed its Integrated Multi Annual Performance System (IMAPS) reporting tool. The IMAPS reports provide USCIS the capability manage its workload in such a way that any unexpected surges in workload can be quickly and easily identified so that management action can be timely taken to address such surges at USCIS and FMS-designated financial agent facilities. USCIS has developed an IMAPS performance report for each field offices, service centers and the National Benefits Center. The IMAPS system allows USCIS roll-up each individual field office and service center IMAPS reports so as to generate a consolidated regional and/or service center and national report.

Recommendation: The Secretary of the Department of Homeland Security should direct the Acting Director of the United States Citizenship and Immigration Services to use projection information across processing centers for workload management purposes, including (1) developing an agencywide application surge work-plan and (2) coordinating with the FMS-designated financial agent on application volume forecasting.

Agency Affected: Department of Homeland Security

Status: Closed - Implemented

Comments: In March 2010 the United States Citizenship and Immigration Services (USCIS) provided analysis of the monthly receipt estimates by form type and processing location for November 2009 through September 2010. The data showed the variation in estimated monthly application receipts and identified the likely effect on workload, including intake, data entry, and mail room activities.

Recommendation: The Secretary of the Department of Homeland Security should direct the Acting Director of the United States Citizenship and Immigration Services to analyze application projection information from a workload perspective, accounting for anticipated monthly variations in application volume.

Agency Affected: Department of Homeland Security

Status: Closed - Implemented

Comments: In August 2010, the United States Citizenship and Immigration Service (USCIS) issued its fiscal year 2010-2011 Immigration and Examinations Fee Account Fee Review Supporting Documentation with Addendum. This review identifies the purposes for which USCIS would rely on its carryover balance and the factors that influence USCIS's ability to maintain carryover balance levels. Based on this analysis, in this report USCIS identifies an amount of carryover balance it believes appropriate for fiscal years 2010 and 2011.

Recommendation: The Secretary of the Department of Homeland Security should direct the Acting Director of the United States Citizenship and Immigration Services to identify an appropriate level of carryover balance to ensure USCIS's continuity of operations for IEFA-funded activities and include in the next fee review a plan for achieving it.

Agency Affected: Department of Homeland Security

Status: Closed - Implemented

Comments: On June 11, 2010, the United States Citizenship and Immigration Service (USCIS) published a proposed rule in the Federal Register to adjust its immigration and naturalization application fees. Among the changes, USCIS proposed increasing the premium processing fee according to the Consumer Price Index.

Recommendation: The Secretary of the Department of Homeland Security should direct the Acting Director of the United States Citizenship and Immigration Services to adjust the premium-processing fees to account for the consumer price index.

Agency Affected: Department of Homeland Security

Status: Closed - Implemented

Comments: In August 2010 the United States Citizenship and Immigration Service (USCIS) issued its fiscal year 2010-2011 Immigration and Examinations Fee Account Fee Review Supporting Documentation with Addendum. This fee review conforms with the biennial review requirement, as USCIS's last fee review was for fiscal years 2008-2009. This review expands prior reviews and better reflects the full costs of USCIS's operations by including USCIS's lockbox operations' costs. In June 2012, USCIS officials said they would continue to consider the costs of statutorily-set fees when they completed their ongoing analysis of processing premium processing and H1-B visa application costs.

Recommendation: The Secretary of the Department of Homeland Security should direct the Acting Director of the United States Citizenship and Immigration Services to develop and conduct timely user-fee reviews that (1) builds on the 2007 fee review and keeps with the Chief Financial Officer's Act's (CFO) biennial user-fee review requirement, and (2) identifies and considers the full costs of USCIS's operations funded from the Immigration Examinations Fee Account (IEFA), including the cost of lockbox operations and processing costs for applications where the fee rates are set in statute such as for premium processing and H1-B visa.

Agency Affected: Department of Homeland Security

Status: Closed - Implemented

Comments: U.S. Citizenship and Immigration Services (USCIS) pays contractors a fixed unit price for each piece of incoming and outgoing mail processed. In April 2011, USCIS issued a policy for validating service center mailroom counts. According to the new policy, the contract performance analysis unit will observe and randomly count incoming and outgoing mail received, selecting mail to be counted using a randomly selected sample.

Recommendation: The Secretary of the Department of Homeland Security should direct the Acting Director of the United States Citizenship and Immigration Services to develop and implement procedures for USCIS to validate the contractors' invoices for incoming mail services at all four service centers.